Monday, February 1, 2016

VERIFY THE DOCUMENTS BEFORE PURCHASE OF THE PROPERTY

A clear and marketable title of property free from encumbrance would provide the owner a rightful ownership of such property and the possession of the property could be either physical or constructive.

The foremost requirement to be exercised by the intending purchaser of property is to thoroughly scrutinize the title deeds of the property. There is no particular yardstick prescribed to trace out the title and, therefore, it depends upon the diligence and application of mind of the person who scrutinizes the documents. Scrutiny of documents is a specialized work and only persons who are well versed in scrutiny of property documents can analyse and give a clear opinion. Generally speaking, origin of the property, subsequent transfers and the present status are the three most important aspects which are taken into consideration to trace the title of a property.

Modes of acquisition

There are different modes of acquisition of property by any individual. Some of the modes of acquisition of property are Grant Land by the Government, allotment made by the Government / Various Autonomous bodies / Housing Societies, etc., acquisition of property under a Will, by purchase or inheritance.

If the property is a Grant Land or allotted by any authority, then the Grant Certificate or Allotment Letter issued by the Competent Authority is necessary, apart from the other relevant documents. In the case of acquisition of property under a Will or by way of purchase, Gift, Exchange, Partition, Release, Settlement or inheritance, it is necessary to scrutinize and verify all the relevant documents of 42 years prior to the date of the present transaction to ascertain the transactions which have taken place during this period. This will enable the purchaser to make sure of the valid title of the vendor. At the same time, genuineness of the relevant documents at the time of transfer of property during this period has to be diligently examined.

The next important step is to examine the present status of the property i.e. who is the present owner, whether his / her name has been recorded in the revenue records of the concerned Authority and whether property taxes are being paid by the owner periodically.

Identification of the Property

The third step is identification of the property which is very important and a must. The purchaser should not only get the property identified but also should compare the description of the property shown in the document with the actual. Accurate details pertaining to the number assigned to that particular property, its extent, boundaries, name of the Village or Municipal Council or any Autonomous bodies within whose limits the said property falls are required to be ascertained. If the building exists on the particular property, then details pertaining to the existing building and whether the building is constructed in accordance with the building sanction plan and relevant Bye Laws of the concerned Authority has to be mentioned. Measurements mentioned in the document should tally with the physical measurements. In case the physical measurement mentioned in the document is less than the actually physical area available, the actual area available is to be considered for the purpose of payment and documentation. Normally, the purchaser shall pay either for the measurements mentioned in the documents or the actual physical measurement, whichever is less.

Nature of Title

Nature of title such as tenancy right, occupancy right, possessory right, full ownership is also another important aspect which requires search and examination since the persons having some interest or right over the property are necessarily to be made as parties to the transaction, sale or mortgage.

Tenanted property

If the property is tenanted, then it is very important to get confirmed from the tenant that there is no litigation pending between the vendor and the tenant pertaining to the ownership of the property or the tenancy rights. Further, it is also necessary to convey the tenant about the proposed sale transaction and to attorn the tenancy in favour of the purchaser.

ConversionNormally, agricultural lands cannot be put to use for non-agricultural purposes. To put to use the agricultural land for non-agricultural purposes it is mandatory to get the agricultural land converted for utilization for non agricultural purposes. However, there are certain exceptions to this mandatory requirement and the agricultural land can be put to use for non-agricultural purposes with the specific order of the competent authority. The special enactments applicable to grant lands also require to be looked into. Further, it is also necessary to find out from the Land Acquisition Department whether the property in question is under the orders of acquisition by the Government and whether any notification to this effect has been issued. by the Government.

Encumbrance certificate

Verification of encumbrance certificates is a part of scrutiny of property documents to rule out any subsisting encumbrance over the property. But, such certificates cannot be totally relied upon since there are instances wherein transactions duly registered in the concerned Sub Registrars office are not reflected in the E.Cs issued by the department. In such cases it is necessary to do the search in the office of the Sub Registrar, on payment of the prescribed fees.

Minors interest

In cases of sale of ancestral property, it is necessary to find out whether the vendor has a clear title over the property and there are no claims of minors interest. If the property proposed to be conveyed is ancestral property, then the involvement of Minors interest is very common. In cases where minors interest are being transferred or conveyed, permission from the court for conveying the property is mandatory under the provision of Guardianship and Wards Act. If the property is conveyed in contravention of the provisions of this Act, then such conveyance can be challenged by the Minor within three years from the date of his attaining majority or from the date of getting knowledge of such a sale.

Thus, for purchase of property it is necessary to verify as to how the vendor has acquired the property. Only upon being satisfied about the valid title of the vendor, the purchaser can negotiate and enter into an agreement of sale with the vendor. It may be noted that if the property is a composite property, then most of the owners will retain the original title documents and only Xerox copies of such documents will be delivered to the purchaser.

Since scrutiny of property documents is technical in nature, utilization of services of anexperienced advocate in property matters would help the purchaser immensely and while scrutinizing the documents the advocate shall be able to decide as to which documents are to be in original and which could be certified copy or Xerox copy.